NFT Basics
In this section we will understand the fundamentals of NFTs.
What Are NFTs
NFTs (also known as Non-Fungible Tokens) are unique cryptographic assets. Unlike Fungible Tokens, NFTs are one-of-a-kind. This means they can’t be replicated or divided into smaller units.
These characteristics mean NFTs can be used to represent various digital assets such as:
Identities/Memberships
Tickets
Real Estate
Posts
Badges
Trading Cards
Difference Between Fungible & Non-Fungible Tokens
Fungible Tokens characteristics:
Interchangeability: Each token is identical to another in type and value, similar to fiat currencies (dollar, euro etc.) where each unit is worth the same.
Divisibility: Fungible tokens can be divided into smaller units, allowing for transactions of varying sizes and values.
Non-Fungible Tokens characteristics:
Uniqueness: Each NFT has distinct properties and cannot be exchanged 1-1 with another NFT.
Indivisibility: NFTs can’t be divided into smaller units. They are bought, sold, and owned whole.
NFTS cannot be copied, substituted, or subdivided (source). While fungible tokens are often used as a medium of exchange or value storage (similar to money), NFTs are used to prove ownership or authenticity of a unique item or piece of content.
NFT Metadata
Metadata provides extra information about an NFT stored in a JSON file. This metadata can be stored both on-chain & off-chain and it is used to provide extra relevant data about the NFT or enhance the asset it is representing. Metadata can include the following:
Images
Name
Attributes
Description
External URLs
NFT Marketplaces such as Opensea often have their own Metadata Standard, which specifies exactly how the Metadata JSON should be formatted.
NFT Metadata is commonly stored off-chain using decentralised file storage such as IPFS (InterPlanetary File System). Users can run their own IPFS node and store their images & metadata for their NFTs.
However, to make it more accessible for everyone here are a few alternatives that can make it easier to store metadata without running an IPFS node yourself:
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